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The term res erves refers to the known and estimated amounts of resources (mineral or hydrocarbon) that remain for later exploitation. Oil reserves are specifically statements reporting calculations of the amount of petroleum existing in the world. Strictly speaking, the only oil reserves are those that have been pumped from the ground and are currently in a container vessel somewhere. The amount is measured in tons or barrels, a 19th-century measure still being used from the days when oil was shipped in wooden barrels. All other measures of reserves of oil that are still in the ground are estimates. The reason for this is because the oil that is still in the ground is hidden from view. However, the means for estimating the amount of oil have developed over the years with good reliability. The terms used to estimate oil resources are proven reserves, conditional reserves, and probable reserves. The latter are hypothetical reserves or at times speculative reserves. These measures are dependent upon a number of possible factors.
Proven oil reserves are estimates of the amount of petroleum that can be pumped from fields that are known and have been explored. Proven reserves in a new prospect increase as the field is explored and developed. The amount of oil in the field will always be much more than the amount that can be recovered. As the field is exploited it “ages” and eventually produces less and less oil at the current price of oil. Proven reserves are calculated by multiplying the length of the field by the width of the field by the thickness of the field by it porosity and by its expected percentage of recovery. All the oil in a proven field is rarely extracted. It is a very highly productive field if 50 percent of the oil is recovered. About 30 percent of the oil from a field is extracted by pumping. An additional 10 percent can be extracted by “secondary methods” such as pumping with water or gas under high pressure. A final 10 percent can be recovered with tertiary methods that heat the oil.
Indicated reserves are the portion of the oil resource in a field that is known from exploration and the amount that may be extracted with improved recovery techniques. Another term is field growth (or inferred reserves), which is that part of a field that is greater than the proven portion of the field. It is the difference between the proven reserves and those added to a field from further discoveries on the margins of the field and from improved recovery.
Conditional reserves are known resources whose recovery is not currently economically feasible. Conditional reserves are estimates of the size, number, or volume of oil that may exist in an area, assuming that anything is actually present. Conditional estimates, therefore, do not incorporate the risk that the area may be devoid of oil. In other words, conditional estimates are assumptions that oil is there and how much is there, but without any sure knowledge. Proven reserves as a figure are mushy because they usually come from national governments. The governments in third world countries may have political or ulterior motives for overestimating or underestimating their oil reserves.
Some geologists and oil engineers use a method for estimating the amount of oil globally as the ratio of the known reserves to the rate of production, which is expressed as RIP. In the 1950s Dr. M. King Hubbert developed a model for estimating the amount of oil in the world. He argued that as the amount of oil discovered is matched by the amount of oil recovered, a peak in production would eventually come, followed by a rapid decline. The peak is now called Hubbert’s Peak. Estimates of oil discovery and consumption have generally not been completely accurate.
After the verification of Hubbert’s Peak for oil production in the United States, there was a steady decline in American production in the early 1970s. However, the efforts of the Organization of Petroleum Exporting Countries (OPEC) to set the price of oil stimulated a global search for oil in which many new sources have been found, increasing the proven reserves globally. About two-thirds of the known reserves are in the politically unstable Middle East. The demand for oil is still increasing, which is pushing companies to search ever deeper under the sea or in ever more remote locations.
Hypothetical reserves are speculative reserves. They are resources that are thought to be there, but are not yet proven. For example, it is believed that there is more oil in the Gulf of Mexico, but some areas have never been drilled, so there may or may not be oil. Many a dry hole has been drilled in locations that were thought to contain oil. The global estimate of the crude oil existing in the world is two trillion barrels. One trillion barrels are estimated to be in proven reserves, with much of that in the Middle East.
However, geologists have estimated that there are two trillion barrels of oil in oil sand tars in Canada alone. Sand tars are deposits of bitumen that are trapped in sandstone or unconsolidated sands. In addition, there are at least two trillion barrels of oil that are trapped in shale in the United States alone, according to some geologists. Shale is a fine-grained sedimentary rock that in the case of oil shale contains kerogen, which can be distilled to produce liquid hydrocarbons or gaseous hydrocarbons that can be converted into gasoline or other products.
- P. Cozic, Global Resources: Opposing Viewpoints (Greenhaven Press, 1998);
- S. Deffeyes, Hubbert’s Peak: The Impending World Oil Shortage (Princeton University Press, 2001);
- S. Deffeyes, Beyond Oil: The View from Hubbert’s Peak (Farrar, Straus, and Giroux, 2005);
- David Goodstein, Out of Gas: The End of the Age of Oil (W.W. Norton, 2005);
- Richard Heinberg, The Party’s Over: Oil, War and the Fate of Industrial Societies (New Society Publishers, 2005);
- P.W. Huber and Mark Mills, The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy (Basic Books, 2005);
- W.F. Lovejoy and P.T. Homan, Methods of Estimating Reserves of Crude Oil, Natural Gas, and Natural Gas Liquids (Resources for the Future, 1965);
- Leonardo Maugeri, The Age of Oil: The Mythology, History and Future of the World’s Most Controversial Resource (Greenwood Publishing, 2006);
- Paul Roberts, The End of Oil: On the Edge of a Perilous New World (Houghton Mifflin, 2005);
- R. Simmons, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy (Wiley, John & Sons, 2005).